A federal judge handed the U.S. Attorney’s Office in New Orleans a stunning rebuke Wednesday, sparing a Hollywood producer convicted last year of bilking Louisiana’s film tax credit program from having to spend any time in prison.
U.S. District Judge Martin Feldman attributed the lenient sentence for the producer, Peter Hoffman, in part to a “serious dispute” as to whether the state actually had been a victim in the unusual case.
Under federal sentencing guidelines, Hoffman faced between 14 and 17 years behind bars — a range Feldman disregarded in much the same way that he earlier had vacated five of the fraud counts for which Hoffman had been found guilty at trial.
Jurors convicted Hoffman, his wife Susan, and New Orleans lawyer Michael Arata of conspiring to steal more than $1 million in tax credits by grossly exaggerating construction costs for a multimillion-dollar project to renovate a dilapidated mansion at the edge of the French Quarter into a post-production film studio.
Hoffman’s attorney, Lance Unglesby, said at Wednesday’s sentencing hearing that the business partners “began this project with nothing but innocent intentions.”
“There is no question that Peter Hoffman delivered on his promise to the state that they would have a post-production studio,” Unglesby said. “Mr. Hoffman is a man who finishes what he starts.”
Prosecutors have said the business partners claimed more than $13 million of expenditures even though the studio at 807 Esplanade Ave. was valued at just $5 million following the renovation.
Despite the jury verdict, Feldman cited “a serious issue as to whether the defendants were entitled to more (film tax) credits than they got.”
He also criticized prosecutors for referencing, in court papers, Hoffman’s well-documented penchant for pursuing civil litigation — remarks Feldman dismissed as “quite juvenile.” Hoffman “might be a lawyer’s retirement dream come true,” Feldman said, “but he has every constitutional right to be just that.”
The judge also placed Susan Hoffman on probation, calling her the “least culpable” of the three business partners. One of her defense attorneys, Harry Rosenberg, said Susan Hoffman was “barely mentioned throughout the trial” and that the studio has become “an economic engine for the city.”
Arata, a businessman who sought to distance himself from the Hoffmans during their joint trial, similarly avoided a prison sentence earlier this year after having the bulk of his convictions overturned.
Peter Hoffman received probation even though he stands convicted of 15 counts of fraud and conspiracy — a startling result considering that he was facing well over a decade in prison under the sentencing guidelines, which are not binding but are typically followed by judges.
“That’s a heck of a variance” from the guidelines, said David S. Weinstein, a former federal prosecutor who described the outcome as “very rare.”
Feldman also said he had considered Hoffman’s health issues — he suffered a heart attack last year — in determining his punishment. The judge ordered Hoffman to pay a $40,000 fine and do 300 hours of unpaid community service.
U.S. Attorney Kenneth Polite Jr. said his office is considering appealing the sentences, just as it has appealed Feldman’s ruling that vacated a host of the convictions in the case.
Polite also issued a pointed statement that accused Peter Hoffman of committing perjury when he took the stand at his trial and sought to portray the government’s case as a misunderstanding.
In the statement, Polite said the business partners had “utilized bogus invoices, fake expenditures and varied misrepresentations to defraud the state of Louisiana and its citizens out of millions of dollars.”
“This criminality was compounded by the fact that, as the court found during sentencing, Peter Hoffman and Michael Arata used sophisticated means and abused positions of trust in committing these felonies,” Polite added.
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